Techs, small stocks weigh down Nasdaq
U.S. stocks ended broadly lower Monday, led by smaller issues, as a morning rally gave way to profit taking.
Early today in Asia investors were jolted by a plunge in the Thai stock market, after the country’s regulators required banks to lock up 30% of new foreign exchange deposits for a year to curb currency speculation.
The move caused the main Thai stock index to plummet 10% before trading was suspended.
On Wall Street, the Dow Jones industrial average finished with a loss of 4.25 points, or less than 0.1%, at 12,441.27.
Another slate of big takeover deals helped push share prices higher at the outset, but the gains didn’t hold. The Dow rose in early trading to a record high of 12,490.70, then pulled back.
Broader indexes also finished in the red. The Standard & Poor’s 500 dipped 4.61 points, or 0.3%, to 1,422.48.
The Nasdaq composite index fell 21.63 points, or 0.9%, to 2,435.57, hurt by sell-offs in Google and Apple Computer.
Smaller stocks were particularly weak. The Russell 2,000 index fell 1.4% to 782.02.
Losers topped winners by about 2 to 1 on Nasdaq and the New York Stock Exchange.
The market has surged since August, lifting major indexes to multiyear or all-time highs. Stocks have been bolstered by strong corporate earnings, falling long-term interest rates and investors’ faith in a “soft landing” for the decelerating economy.
The Dow is up 16.1% year to date, its best gain since 2003.
Some analysts expect stock prices to mostly tread water between now and year’s end, as many players depart for the holidays. But weakness could spur selling by investors who are nervous about protecting their hefty paper gains, analysts said.
That may have hurt technology issues Monday.
“The market has not had a correction in so long,” said Richard Williams, director of equity research at brokerage ICAP in New York. “Techs have been the leaders and that’s where the gains have been, so those are going to be the first ones that sell.”
Google, which has pulled back from a record high of $509.65 on Nov. 21, slumped $17.50, or 3.6%, to $462.80. A story in the Wall Street Journal said Google wasn’t likely to enjoy the same boost to earnings growth in 2007 that it got this year from interest income on its cash hoard.
Apple dropped $2.25 to $85.47. The stock is up 19% this year.
Despite the market’s indigestion Monday, the latest flurry of corporate takeovers is a sign of confidence in the economy on the part of executives and private-equity funds, analysts said.
Realogy, parent of Century 21 and Coldwell Banker real estate brokerages, jumped $4.90 to $30.40. The company agreed to a $30-a-share buyout by Apollo Management. The stock’s rise above the bid suggested that investors expect competing offers.
Pharmacy benefits firm Caremark soared $5.28 to $55.58 after Express Scripts launched an unsolicited bid to acquire Caremark, in an attempt to scuttle a competing offer from the CVS drugstore chain. Express Scripts rose $1.31 to $69.97; CVS lost 51 cents to $30.01.
In commodities trading Monday, near-term crude oil futures fell $1.22 to $62.21 a barrel in New York as temperatures warmed up in the East. Natural gas futures fell to a seven-week low.
Home-heating demand in the Northeast will be 30% below normal through Christmas Day, said Weather Derivatives, a forecasting firm.
Oil prices had moved up in recent weeks as U.S. inventories declined more than expected.
In the Treasury bond market yields were little changed. The 10-year T-note ended at 4.58%, down from 4.59% on Friday.
Thailand’s surprise move could cause reverberations in other emerging markets, which have been red hot this year.
Foreign investors buying the Thai currency starting today will be able to invest only 70% of what they transfer, and only recoup all of their funds if they keep the money in Thailand for more than a year, the nation’s central bank said. The move is aimed at curbing speculation that has driven up the currency’s value.
Among the day’s U.S. market highlights:
* Energy stocks fell with crude prices. Occidental Petroleum lost $2.22 to $49.70 and Chevron declined $2.05 to $73.33.
* Imax sank 36 cents, or 9%, to $3.71 after the movie-screen maker said late Friday that it was no longer for sale. No bid represented “acceptable valuation,” the company said.
* Pfizer added 19 cents to $25.83, then edged higher after hours, following the company’s announcement that it raised its quarterly dividend 21%, to 29 cents a share. Pfizer also reiterated that it may buy back as much as $10 billion in stock in 2007. The firm has been struggling to get new drugs to market.
